Accounting Homework

Chapter06.Exercises.xlsx

E6-20

Financial Accounting
E6-20	Journalizing perpetual inventory transactions - cost of sales given
LO 3 [10-15 minutes]
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Date:
Accounting records for Josh’s Shopping Bags yield the following data for the year
ended May 31, 2019:
Inventory, May 31, 2018 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .				$8,000
Purchases of inventory (on account) . . . . . . . . . . . . . . . . . . . . . . . . . . .				46,000
Sales of inventory – 81% on account; 19% for cash (cost $38,000) . . .				76,000
Inventory, May 31, 2019 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .				?
Requirements
1.	Journalize the inventory transactions for the company using the data given.
2.	Report ending inventory on the balance sheet, and sales, cost of goods sold, and
	gross profit on the income statement.
Test Your Knowledge
E6-20
Req. 1
Journal
DATE	ACCOUNTS AND EXPLANATIONS		DEBIT	CREDIT
May 31	Purchases:
31	Sales:
Req. 2
	BALANCE SHEET
	Current assets:
	INCOME STATEMENT:
	Gross profit

Financial Accounting
E6-25	Applying the lower-of-cost-or-market rule to inventories
LO 5 [5 minutes]
		Students please fill-in areas that are shaded
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Course Name
Student ID:
Date:
Naturally Good Foods reports inventory at the lower of average cost or market.
Prior to releasing its March 2019 financial statements, Naturally’s preliminary
income statement, before the year-end adjustments, appears as follows:
		NATURALLY GOOD FOODS
		Income Statement (partial)
		For the year ended March 31, 2019
		Sales revenue	$ 117,000
		Cost of goods sold	45,000
		Gross profit	$72,000
Naturally has determined that the replacement cost of ending inventory is $17,000.
Cost is $18,000.
Requirements
1.	Journalize the adjusting entry for inventory, if any is required.
2.	Prepare a revised income statement to show how Naturally Good Foods should
	report sales, cost of goods sold, and gross profit.
Test Your Knowledge
E6-25
Req. 1
Journal
DATE	ACCOUNTS AND EXPLANATIONS		DEBIT	CREDIT
Mar. 31
Req. 2
	INCOME STATEMENT:
	Gross profit		$ - 0

Good student April 23, 2011

Financial Accounting
P6-32A	Accounting for results on income for inventory using the LIFO cost method
LO 3, 4 [30-40 minutes]
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Date:
Refer to the Fit World situation in Problem 6-31A.
P6-31 A is repeated here for your convenience.
Fit World began January with an inventory of 80 crates of vitamins that cost a total
of $4,000. During the month, Fit World purchased and sold merchandise on account
as follows:
	Purchase 1 . . . . . . . . . . . . . . . .		140 crates @ $ 55
	Sale 1 . . . . . . . . . . . . . . . . . . . .		160 crates @ $ 100
	Purchase 2 . . . . . . . . . . . . . . . .		160 crates @ $ 100
	Sale 2 . . . . . . . . . . . . . . . . . . . .		170 crates @ $ 110
Fit World uses the LIFO method.
Cash payments on account totaled $5,000. Operating expenses for the month were
$3,300, with two-thirds paid in cash, and the rest accrued as Accounts payable.
Requirements
1.	Using the results from the LIFO costing method calculations in Problem 6-31A,
	prepare a multi-step income statement for Fit World for the month ended
	January 31, 2019.
Test Your Knowledge
P6-32A
First, solve P6-31A FIFO
LIFO
	Purchases			Cost of Goods Sold			Inventory on Hand
Date	Quantity	Unit	Total	Quantity	Unit	Total	Quantity	Unit	Total
		Cost	Cost		Cost	Cost		Cost	Cost
Beginning							80	$50	$4,000
Purchase 1							80	50	4,000
	140	$55	$7,700				140	55	7,700
Sale 1							60	50	3,000
Purchase 2							60	50	3,000
	160	60	9,600				160	60	9,600
Sale 2							50	50	2,500
Ending	300		$17,300				50		$2,500
Req. 1
	Fit World
	Income Statement
	Month Ended January 31, 2019
							- 0
	Net income						- 0

Really good student April 23

Financial Accounting
P6-34A	Applying the lower-of-cost-or-market rule to inventories
LO 5 [5 minutes]
		Students please fill-in areas that are shaded
Student Name
Course Name
Student ID:
Date:
Richmond Sporting Goods, which uses the FIFO method, has the following account
balances at August 31, 2019, prior to releasing the financial statements for the year:
	Inventory			Cost of goods sold
Bal.	14,500		Bal	67,000
	Sales revenue
		Bal. 117,000
Richmond has determined that the replacement cost (current market value) of the
August 31, 2019, ending inventory is $13,500.
Requirements
1.	Prepare any adjusting journal entry required from the information given
2.	What value would Richmond report on the balance sheet at August 31, 2019,
	for inventory?
Test Your Knowledge
P6-34A
Req. 1
Journal
DATE	ACCOUNTS AND EXPLANATIONS			DEBIT	CREDIT
Aug 31
	To write inventory down to market value
Req. 2
	Richmond Sporting Goods
	Balance Sheet (partial)
	August 31, 2019

Jennie M. April 23

E6-20

Journalizing perpetual inventory transactions - cost of sales given

LO 3 [10-15 minutes]

Financial Accounting

Students please fill-in areas that are shaded